Major International Business Headlines Brief::: 02 February 2021

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Major International Business Headlines Brief::: 02 February 2021

 


 

 


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ü  Retail investors turn attention to silver as GameStop shares retreat

ü  Fed policy makers, like lawmakers, split on need for more fiscal aid

ü  Asian markets extend gains as sentiment improves on outlook

ü  All eyes on Alphabet's first-ever disclosure of Google Cloud profit

ü  Google to spend $3.8 million to settle accusations of hiring, pay biases

ü  Oil prices rise as producers commit to output restraint

ü  Japan stocks rise for second day as focus shifts to earnings reports

ü  Elon Musk backs Bitcoin, talks crypto future

ü  South Korea January inflation speeds up, beating forecasts

ü  Kenya: How Sh2 Billion Loans Per Day Pushed Kenya Into Sh7.2trn Debt Hole

ü  Nigeria: Naira Gains As External Reserves Rise U.S.$1.11 Billion in
January

ü  Namibia: Fuel Prices to Increase On Wednesday

ü  Momentum Acquires Alexander Forbes

ü  Namibia: Air Namibia's Flawed Business Model Results in Significant
Unsustainable Debts - Official

ü  Agra Launches Online Agricultural Academy

 

 


 <mailto:info at bulls.co.zw> 

 


Retail investors turn attention to silver as GameStop shares retreat

LONDON/TORONTO (Reuters) - A social media-driven buying spree lifted silver
to an eight-year high on Monday, though prices later pared gains on doubts
about the ability of retail traders that have been focused on stocks to sway
prices in the bigger, more liquid commodity.

 

Silver prices climbed to an eight-year peak of just over $30 an ounce before
cooling off a little to trade up 6.3% at $28.70.

 

At the same time, video game retailer GameStop Corp, at the center of last
week’s “Reddit rally,” slid 30.8% to $225, but other shares caught up in the
frenzy that has battered short-sellers extended their advance, including
BlackBerry Ltd.

 

A lot of people who were anticipating a GameStop-like rally in silver “now
realize there is not as much buying pressure pushing it up like some had
thought,” said Michael Matousek, head trader at U.S. Global Investors.

 

It was not clear how long the Reddit-fueled rally in stocks shorted by hedge
funds would last. It could mean more losses in the wider market this week if
funds have to keep selling to meet redemptions or right their portfolios.
Longer-term, they may have to shift strategies.

 

Share prices swung wildly last week when small-time traders, who organised
in online forums and traded with fee-free brokers such as the Robinhood
online brokerage, saddled several powerful hedge funds with losses on their
short positions.

 

On Monday, however, the effect of the struggle on the wider U.S. market
abated, with stocks ending sharply higher.[.N] AMC Entertainment Holdings
Inc was flat, having risen more than 500% this year. BlackBerry shares were
higher in New York and Toronto trading.

 

Robinhood continued to roll back trading restrictions on some retail-driven
stocks on Monday, raising its trading limit on GameStop to 20 shares from
four. It also raised trading limits on AMC and Koss Corp.

 

Investors who have been short shares of GameStop cut their year-to-date
losses on Monday with a mark-to-market gain of $2.71 billion after the stock
tumbled, according to analytics firm S3 Partners. Mark-to-market losses for
short-sellers year-to-date stand at $12.6 billion, the firm said.

 

The showdown has drawn scrutiny from financial regulators, lawmakers and the
White House, concerned about possible market manipulation.

 

The U.S. House of Representatives Financial Services Committee said on
Monday it will hold a hearing on recent market volatility on Feb. 18.
Politico, citing people familiar with the matter, reported that Robinhood
Chief Executive Vlad Tenev was expected to testify on Capitol Hill on that
day.

 

Robinhood raised another $2.4 billion from shareholders just days after
existing investors pumped in $1 billion, it said in a blog post. The
company, which faced anger last week for curbing the purchase of some
stocks, raised trading limits on GameStop, AMC, Koss Corp and Express Inc.

 

The firm is preparing for an initial public offering but it was not clear if
it will push forward with those plans.

 

COLD WATER

Traders and analysts poured cold water on the chances of a prolonged rally
in silver, saying unlike in GameStop, there is no excessive short
positioning and that the options market is fairly well balanced.

 

Speculative financial investors were already positioned fairly bullishly,
dealers said. Net long positions in COMEX Silver futures and options rose to
about 44,320 lots as of Jan. 26, data from the U.S. Commodity Futures
Trading Commission (CFTC) showed.

 

“Unlike single stocks, the market for silver is much larger and more complex
and therefore more difficult to manipulate,” said Raffi Boyadjian, senior
investment analyst at XM, in a note.

 

Traders were growing concerned that the Reddit effect could extend to less
liquid commodities markets. However, traders said exchange-traded funds that
focus on commodities were more likely to be targets.

 

The iShares Silver Trust ETF, the largest silver-backed ETF, jumped 7.1% on
Monday. Data showed its holdings rose by a record 37 million shares from
Thursday to Friday alone, each representing an ounce of silver.

 

Mining behemoths BHP Group, Glencore Plc and Anglo American Plc were the top
six gainers on the FTSE 100 in London. Miner Fresnillo rose 8.95%, and U.S.
small-cap miners Hecla Mining Co and Coeur Mining Inc surged 28.3% and
23.1%, respectively.

 

Small silver miners in Australia, which had leapt on Monday, retraced some
of their gains on Tuesday.

 

Natural gas rose about 10% on Monday, in part due to expectations for colder
weather, though such moves are not out of the norm for that market.

 

Late on Monday, the Chicago Mercantile Exchange increased margins for
several commodities contracts, including silver futures which was hiked by
nearly 18%, as part of “normal review of market volatility to ensure
adequate collateral coverage.”

 

The CME typically raises margins when there are big price moves to account
for the increased risk.

 

GET OUT THERE AND BUY

The silver furore began on Thursday after posts on the popular Reddit online
forum WallStreetBets urged investors to buy physical silver.

 

“Get out there and buy at least 4 ounces of silver as soon as you can,” one
forum participant posted.

 

Retail traders poured a record A$40 million ($30.6 million) into Australian
ETF Securities’ Physical Silver fund by the afternoon. A silver ETF in Japan
surged 11%.

 

Other investors expressed concerns on WallStreetBets on Monday that silver
was undercutting their focus.

 

“By buying silver ... you would be directly putting money into the pockets
of the EXACT HEDGE FUNDS ON THE OTHER SIDE OF $GME,” wrote one user who
urged investors to continue to buy GameStop.

 

“It will put you on the sidelines from this righteous and glorious war we
are in.”

 

 

 

Fed policy makers, like lawmakers, split on need for more fiscal aid

(Reuters) - As the White House and Congressional Democrats press for a $1.9
trillion pandemic relief package that many Republicans say is more than what
the country needs or can afford, Federal Reserve policymakers are also split
on the issue.

 

“We are still in the teeth of this pandemic - and we are not out of the
woods yet,” Dallas Fed President Robert Kaplan told the Chicago Council on
Global Affairs in an online event Monday.

 

He forecast, as vaccines get rolled out and more businesses can reopen, the
U.S. economy will likely grow about 5% this year, enough to push
unemployment down to 4.5%, from 6.7% in December.

 

That forecast, he said, assumes no further fiscal relief, except what may be
needed to ensure there’s enough money to vaccinate people and reopen
schools, and for the unemployed to make ends meet - an amount he didn’t
quantify.

 

Minneapolis Federal Reserve Bank President Neel Kashkari, among the central
bank’s most dovish policymakers, had a more expansive view of fiscal relief,
likening it to “wartime spending” and noting that the government has plenty
of capacity for issuing debt to pay for it.

 

Kashkari also suggested he supports stimulus checks, a key part of President
Joe Biden’s proposal opposed by Republican critics who contend that many who
get the checks may not actually need them. Biden’s $1400 payments would come
on top of the $600 checks in the package Congress passed in December, and
the $1200 checks included in the first round of pandemic relief.

 

“It’s very hard to design a government program for the whole U.S. economy
that is effectively targeted that doesn’t leave lots of people out,”
Kashkari told an online seminar held by Montana’s Bureau of Business and
Economic Research. “The checks are like spraying water against the fire:
sometimes you just need water.”

 

RECESSION FAR FROM OVER

The United States has been devastated by COVID-19, with more than 26 million
Americans infected so far, and more than 441,000 dying in total.

 

 

Despite strength in the housing sector and some other segments of the
economy, the recession is far from over. Some 18 million Americans are
drawing on some form of unemployment insurance, many in hard-hit service
industries like restaurants, travel and hotels.

 

Congress and the White House, not the Fed, will decide how much stimulus
will be rolled out, but what is actually necessary remains a matter of
heated debate.

 

West Virginia Governor Jim Justice, a Republican, said he supports more
fiscal relief. “If we actually throw away some money right now, so what,” he
told CNN Monday.

 

West Virginia Senator Joe Manchin, a Democrat, has said relief should be
targeted to those who need it.

 

 

 

 

Atlanta Fed President Raphael Bostic summed up the general confusion Monday.

 

“It is hard for me to say exactly what the right number is. There is so much
uncertainty going on right now,” Bostic told CNBC. “What I am looking at
right now...is what is happening over the next six months, 12 months, and
trying to get a sense of where businesses are, get a sense of how families
are weathering the storm...and what we’ll look like in the summer time when
I am hopeful that so much of the vaccine will be through the population.”

 

The White House continued Monday to press for the $1.9 trillion package.

 

“The risk is not that it is too big, this package, the risk is that it is
too small,” Jen Psaki, White House Press Secretary, said on Monday ahead of
Biden’s meeting with 10 Republican Senators proposing a $618 billion relief
package. “That remains his view and it’s one he’ll certainly express today.”

 

 

 

Asian markets extend gains as sentiment improves on outlook

(Reuters) - Asian stock markets extended gains on Tuesday on increased
optimism about stimulus packages and global economic recovery, while retail
investors retreated from GameStop and their new-found interest in silver.

 

 

MSCI’s gauge of Asia Pacific stocks outside Japan was up 1.25% mid-morning,
building on Monday’s rise. Hong Kong’s Hang Seng Index and China’s benchmark
CSI300 Index opened 1.7% and 0.33% higher, respectively. Japan’s Nikkei 225
gained 0.67%.

 

Markets were buoyant ahead of negotiations Tuesday between U.S. President
Joe Biden and Republican senators on a new COVID support bill. The GOP’s
$618bn stimulus plan released early Monday was about a third the size of the
President’s proposal. Top Democrats later on Monday filed a joint $1.9
trillion budget measure in a step toward bypassing Republicans.

 

“The debate (around the stimulus package) will be really interesting.
Markets will follow it,” said Kyle Rodda, market analyst at IG. “(but)
markets have been pricing in that a stimulus pacakge will be put in place in
the future.”

 

Australia’s S&P/ASX 200 benchmark added a further 1.23%, as the country’s
central bank is expected to maintain its current policy setting when it
releases the results of its Tuesday board meeting at 3:30am GMT.

 

South Korea’s KOSPI also gained, adding 2.3%, as the country’s ruling party
readies another round of COVID-19 cash handouts and an extra budget.

 

Institutional investors are still digesting the retail trading frenzy that
has boosted GameStop Corp and other so-called meme stocks in recent sessions
against their financial fundamentals.

 

Spot silver prices eased on Tuesday, falling more than 1% to $28.30 in early
trade, as some of the feverish retail-trader driven interest in the precious
metal cooled.

 

On Monday, amateur investors who have been organizing on social media sites
like Reddit and Twitter, set their sights on silver, driving up mining
stocks around the world and sending precious metals dealers scrambling for
bars and coins to meet demand.

 

Spot gold rose 0.12% to $1,862.36 per ounce Tuesday. U.S. gold futures fell
0.04% to settle at $1,860.1 per ounce.

 

Brent crude was up 0.75% at $56.77 a barrel. U.S. crude recorded the same
gain to $53.96 on Tuesday morning as falling inventories and rising fuel
demand due to a massive snow storm in the Northeast United States propped up
prices.

 

 

All eyes on Alphabet's first-ever disclosure of Google Cloud profit

(Reuters) - Alphabet Inc will report the cost and operating profit of its
Google Cloud business for the first time on Tuesday, disclosures that are
expected to overshadow record overall quarterly sales for the internet’s
biggest platform for ads.

 

The transparency marks a milestone after years of aggressive investment and
comes as the COVID-19 pandemic is pushing more work, shopping and
entertainment online.

 

That drives the ad business Google dominates over rivals Facebook Inc and
Amazon.com Inc, and it also has created a surge in demand for both parts of
Google’s cloud business: computing services for retailers and other
companies and corporate productivity suites including tools like Gmail.

 

JPMorgan & Chase Co analysts, among the few to make predictions about Google
Cloud, estimate the unit’s 2020 operating margin at 2%. Bank of America
analysts estimate an unspecified operating loss.

 

By comparison, Amazon’s Web Services, the top cloud vendor by sales, posted
third-quarter operating margin of 30.5% and $3.5 billion in operating
income.

 

Microsoft’s Azure, the industry No. 2, does not report comparable figures.

 

Google got serious about the cloud around 2016, five years after Amazon’s
unit had become a multibillion-dollar behemoth. But some analysts say Google
may be ready to show that its heavy investment in staff and data centers to
catch up in the industry is finally paying off.

 

Alphabet’s costs have been an increasing concern for Wall Street as sales
growth from the advertising business flattens out.

 

The company started disclosing Cloud and YouTube sales a year ago. Alphabet
will provide a detailed annual breakdown for Cloud going back three years.

 

 

Wall Street analysts forecast fourth-quarter Cloud sales of $3.82 billion
for Google, with expectations for the unit to cross $13 billion in annual
sales, according to Refinitiv data.

 

The JPMorgan analysts estimate Google Cloud spent about 40% more in 2020
than Amazon’s cloud unit did in 2016, when it had about $12 billion in
sales. Google’s spending reflects higher competition, as well as cloud
vendors expanding into newer technologies.

 

Analysts expect Google’s advertising business will post $42.6 billion in
fourth-quarter sales, pushing overall Alphabet quarterly revenue to $53
billion. That would leave Alphabet with 2020 sales of $179 billion and
profit of $11 billion.

 

 

 

 

Google to spend $3.8 million to settle accusations of hiring, pay biases

OAKLAND, Calif. (Reuters) - Alphabet Inc’s Google will spend $3.8 million,
including $2.6 million in back pay, to settle allegations that it underpaid
women and unfairly passed over women and Asians for job openings, the U.S.
Department of Labor said on Monday.

 

The allegations stemmed from a routine compliance audit several years ago
required by Google’s status as a supplier of technology to the federal
government.

 

Google said it was pleased to have resolved the matter.

 

The Office of Federal Contract Compliance Programs had found “preliminary
indicators” that Google from 2014 to 2017 at times underpaid 2,783 women in
its software engineering group in Mountain View, California, and the Seattle
area.

 

Investigators also found hiring rate differences that disadvantaged women
and Asian candidates during the year ended Aug. 31, 2017, for software
engineering roles in San Francisco, Sunnyvale, California, and Kirkland,
Washington.

 

The settlement includes $2.6 million in back pay to 5,500 employees and job
candidates and calls on Google to review hiring and salary practices.

 

Google also will set aside $1.25 million for pay adjustments for engineers
in Mountain View, Kirkland, Seattle and New York over the next five years,
according to the settlement. Any unused funds will be spent on diversity
efforts at Google.

 

The company already conducts annual pay audits, but like other big tech
companies, it remains under public scrutiny for a workforce that does not
reflect the country’s makeup in terms of race and gender.

 

The company said in a statement, “We believe everyone should be paid based
upon the work they do, not who they are, and invest heavily to make our
hiring and compensation processes fair and unbiased.”

 

 

 

Oil prices rise as producers commit to output restraint

TOKYO (Reuters) - Oil prices rose around 1% on Tuesday after major producers
showed they were cutting crude output in line with their commitments on
restraint, supporting a market thrown out of kilter by weak demand during
the coronavirus pandemic.

 

Brent crude was up 51 cents, or 0.9%, at $56.86 a barrel by 0134 GMT, while
U.S. oil gained 53 cents, or 1%, to $54.08 a barrel. Both contracts rose
more than 2% in the previous session.

 

OPEC crude production increased for a seventh month in January, a Reuters
survey found, after the group and its allies agreed to ease supply curbs
further, but the growth was smaller than expected.

 

The Organization of the Petroleum Exporting Countries was pumping 25.75
million barrels per day (bpd) in January, the survey found, up 160,000 bpd
from December.

 

Russian output increased in January but in line with the agreement on
reducing production, while in Kazakhstan oil volume fell for the month. Both
countries are members of the OPEC+ grouping that banded together to help
support prices with production cuts.

 

“The critical take away from yesterday’s oil market recovery rally is that
OPEC+ members seem to be taking their commitment to output cuts to the
heart,” said Stephen Innes, global markets strategist at axi.

 

“Having OPEC+ singing from the same hymn page is music to every oil trader’s
ears,” he added.

 

Russian oil and gas condensate output rose by 120,000 barrels per day (bpd)
to 10.16 million bpd in January from December, following the agreement on
production restraint, two sources familiar with the data told Reuters on
Monday.

 

Kazakhstan cut its oil production by 2% in January from the previous month
due to power outages, which also improved its compliance with the OPEC+
deal, two industry sources familiar with the matter said and Reuters
calculations showed on Monday.

 

Helping to support prices, a severe blizzard hitting a large area of the
northeastern United States is pushing up demand for heating fuel.

 

 

 

Japan stocks rise for second day as focus shifts to earnings reports

(Reuters) - Japanese shares extended gains for a second consecutive session
on Tuesday, recovering from last week's sharp sell-off, while growing
optimism about corporate earnings both domestically and in the United States
also boosted sentiment.

 

The Nikkei index .N225 rose 0.77% to 28,306.82 by 0155 GMT, with
semiconductor-related shares and materials makers leading gains. The broader
Topix .TOPX rose 0.83% to 1,844.91.

 

Japanese stocks took their lead from an overnight jump in U.S. tech shares
ahead of earnings from Amazon.com AMZN.O and Alphabet Inc GOOGL.O later in
the day.

 

In addition, many Japanese companies are reporting earnings this week, and
some investors are betting that a gradual recovery in the global economy
will lift profits.

 

 

Worries about a short-squeeze triggered by U.S. retail investors shook
global markets last week, but volatile swings have abated this week, which
makes it easier for bullish investors to buy shares and other riskier
assets.

 

 

"U.S. markets are starting to settle down, so we can turn our attention back
to earnings and fundamentals," said Takashi Nishizawa, head of research at
Nomura Securities.

 

"The U.S. economy is on a stable footing. There's optimism about earnings
for the U.S. tech sector and Japanese manufacturers."

 

Leading gains on Topix, Sony Corp 6758.T jumped 3.15%, followed by Murata
Manufacturing Co 6981.T surging 3.02%.

 

 

Top decliners were Keyence Corp 6861.T and Hoya Corp 7741.T falling 1.94%
and 1.40%, respectively.

 

The Japanese government is expected to extend a state of emergency for Tokyo
and surrounding cities later in the day to curb a spike in coronavirus
infections, but investors shrugged this off as they focused on earnings
outlook.

 

There were 165 advancers on the Nikkei index, against 56 decliners.

 

The volume of shares traded on the Tokyo Stock Exchange's main board .TOPX
was 0.45 billion, compared to the last 30-day average of 1.16 billion.

 

 

 

Elon Musk backs Bitcoin, talks crypto future

INX Limited CMO Douglas Borthwick argues bitcoin will continue to rebound
following its pullback.

 

Just days after Elon Musk added #bitcoin to his Twitter bio, a move that
caused the price of the cryptocurrency to briefly surge around 20% on
Friday, the Tesla boss confirmed that he is a supporter of bitcoin.

 

“I do at this point think bitcoin is a good thing, and I am a supporter of
bitcoin,”  Musk said when asked about his thoughts on cryptocurrencies
during a live-streamed interview on the popular audio chat app Club House on
Sunday. “Many friends of mine have tried to convince me to get involved in
bitcoin for a long time.”

 

Musk added. “I think bitcoin is really on the verge of getting broad
acceptance by conventional finance people.”

 

GAMESTOP VOLATILITY USHERS IN RECORD BUSINESS FOR CRYPTO PLATFORM

 

Musk explained that one friend offered him a slice of "bitcoin cake" in
2013.

 

"I mean I clearly should have at least bought some bitcoin eight years ago,"
Musk said, noting he has been late to the party on bitcoin.

 

GET FOX BUSINESS ON THE GO BY CLICKING HERE

 

The value of the cryptocurrency traded above the $33,000 level on Monday
evening after hitting an all-time high of $42,000 at the beginning of 2021.

 

To Musk's point, large institutions including Mass Mutual and PayPal
recently disclosed acceptance of the digital currency.

 

BITCOIN SHEDS BAD BOY IMAGE

 

When asked about other forms of cryptocurrency, Musk admitted that he
doesn't have any "strong opinion." However, the billionaire has previously
tweeted about Dogecoin, including a 2019 tweet in which he referred to it as
his “fav cryptocurrency.”-fox

 

 

 

South Korea January inflation speeds up, beating forecasts

SEOUL (Reuters) - South Korea’s consumer prices rose 0.6% in January from a
year earlier, government data showed on Tuesday, slightly faster than a 0.5%
rise in December 2020 and beating a 0.3% gain tipped in a Reuters survey.

 

Month-on-month inflation was 0.8%, logging the fastest growth since
September 2018 and higher than the poll’s prediction of a 0.5% rise. In
December, it rose 0.2%.

 

 

 

Kenya: How Sh2 Billion Loans Per Day Pushed Kenya Into Sh7.2trn Debt Hole

April 9, 2013. President Uhuru Kenyatta is sworn in. As he assumes the most
powerful office in the land, Kenya's total public debt is just Sh1.8
trillion.

 

If this debt was shared among the then population of 45.5 million Kenyans,
each citizen would owe about Sh40,000.

 

After settling in State House, the seat of the presidency, President
Kenyatta's youthful government changes tact, and starts an unprecedented
spending on infrastructure, which required that he stepped hard on the debt
gas pedal. The political promises had outweighed the cash in the coffers.

 

Sh7.2 trillion public debt

 

November 2020, 92 months later, Kenya's mountain of public debt has now
climbed to Sh7.2 trillion. The Jubilee administration has been borrowing
Sh59 billion every month, about Sh2 billion every 24 hours, thrusting East
Africa's biggest economy into a dangerous cycle of debt.

 

Where that money has been sunk -- in a country where corruption and kickback
driven projects litter the terrain -- is the question that dodges observers.

 

But the effects of the debt spree are becoming very difficult to hide.

 

Government is delaying to pay salaries. Counties are going for three months
without disbursements -- and the once-confident Treasury mandarins are mean
with numbers.

 

Every citizen now owes Sh137,000, which is 3.4 times more than what they
owed just eight years ago.

 

Domestic borrowing

 

Worse, for very Sh100 the taxman is collecting in taxes, the Treasury is
spending Sh60 on debt repayments. Domestic borrowing has also been rising.

 

For instance, servicing costs for six months between July and December 2020
stood at Sh413.51 billion against tax receipts of Sh673.61 billion.

A cash strapped government is increasing taxes in the middle of a pandemic.
The economy that is dangerously addicted to debt has been hit by the
Covid-19 pandemic, and has just slipped into a recession for the first time
in two decades.

 

Lacking the stomach to tackle spiralling debt, Treasury is extending its
requests for a debt repayment holiday to all bilateral lenders, desperately
looking for some breathing space to reduce its debt interest burden.

 

First, it was global ratings agency Moody's that flashed the first red
signal in 2008, after it downgraded Kenya's credit scores to B2 from B1,
citing pressure from the country's rising debts.

 

"The drivers of the downgrade relate to an erosion of fiscal metrics and
rising liquidity risks that point to overall credit metrics consistent with
a B2 rating," Moody's said in its downgrade note to investors.

 

 

'High credit risk'

 

"The fiscal outlook is weakening with a rise in debt levels and
deterioration in debt affordability that Moody's expects to continue."

 

While a B2 is considered a "high credit risk", Treasury did not like the new
status and quickly disputed the downgrade, arguing that it did not reflect
the country's fundamentals.

 

Then came International Monetary Fund (IMF) and the World Bank, which in
various reports raised concerns after Kenya's GDP to debt ratio crossed the
50 per cent mark and started racing towards 60 per cent. The recommended
threshold for developing countries is 40 per cent.

 

And that was not all.

 

Parliament's budget office also joined the chorus, advising repeatedly in
its quarterly reports that Kenya needed to ease its foot on the debt gas
pedal, and focus on completing old projects before starting new ones.

 

Other reputable institutions and independent economists, such as the
Institute of Certified Public Accountants of Kenya (ICPAK) and the Institute
of Economic Affairs (IEA), have also added their voice on the debt crisis
facing the country.

 

But it is the downgrade of Kenya's credit ratings outlook by Moody's and
Standard and Poor's (S&P) and the raising of Kenya's risk of debt distress
to high by the IMF that jerked Treasury mandarins into action.

 

In changing Kenya's risk of debt distress to high from moderate, the IMF
said Kenya's debt stood at 61.7 per cent of GDP at the end of 2019, up from
50.2 per cent at the end of 2015, driven up by budget deficits caused by
large infrastructure projects, such as a new railway line.

 

Major risk for economy

 

By this time, it was now indisputable that debt has now become a major risk
for the economy, and the Treasury was now recognising it in its budget
policy statements.

 

Being among 76 low-income countries benefiting from a global Debt Service
Suspension Initiative (DSSI) by the G20 grouping of the world's largest
economies is not enough to soften its debt crisis triggered by the rising
cost of servicing public debt.

 

A restless taxman is ruthlessly pursuing taxpayers struggling to keep their
businesses afloat. A broke Treasury, unable to follow through with austerity
measures, is running out of options.

 

But the biggest nightmare is a growing debt crisis, whose all danger signals
are blinking red.

 

Just how did Kenya get here? Where did the Sh5.4 trillion borrowed by the
Jubilee administration go? And how has President Kenyatta's finance bosses
fared compared with their predecessors.

 

As Kenyans jeered and smeared mud on President Daniel arap Moi in December
2002, tired of a president who had ruled the country with an iron fist, and
left the country's economy in tumbles, the stock of Kenya's total public
debt was just Sh630 billion. This is according to official data from the
Central Bank of Kenya (CBK).

 

Mwai Kibaki

 

Then Mwai Kibaki, an economist, and a former finance minister came in
December 2002 during the big opposition wave that swept him into office.

 

Kibaki increased Kenya's public debt to Sh1.8 trillion. This translated to
about Sh14.5 billion every month or Sh480 million every day. But he presided
over a government that lived within its means, only borrowed when it was
necessary, but most importantly, weaned the economy from the over dependence
on foreign lenders, leaving behind a country that could comfortably fund its
own budget.

 

Jubilee government

 

That was before the Jubilee government came in and threw all caution to the
wind, borrowing Sh5.4 trillion in 92 months.

 

To put this number in perspective, if this amount was to be used to build
the standard gauge railway (SGR), then Kenya would have put up 17 such
railways like the one between Nairobi and Mombasa around the country. If it
was just to build super highways with the money, then it will put up 154
Thika superhighways.

 

Though debt is driven by the spending priorities of the government of the
day, it is the finance ministers, who prepare the budgets, advice the
governments on how best to fund them. They are also the men and women who
sign off on the various debt instruments and loans borrowed.

 

Best and worst finance ministers

 

To put in perspective how avaricious the current administration is in terms
of debt accumulation, we have gone back to September 1999, when Chris Okemo
took over the Ministry of Finance, to track how Kenya got where it is today.

 

Okemo served for about 21 months. During his time, he found the total debt
book at Sh503 billion. In his time, Okemo borrowed about Sh100.9 billion.
This works out to Sh5 billion every month or Sh160 million every day.

 

His successor, Christopher Obure was at the Treasury for about one year from
December 2001. In 12 months, Obure borrowed Sh23.2 billion. This is about
Sh1.9 billion every month or Sh65 million per day.

 

Obure, the last of President Moi's finance ministers slowed down the pace at
which the government was borrowing substantially, and when he left, the
country's public debt stood at about Sh630 billion.

 

Kibaki era

 

Then entered President Mwai Kibaki, who trusted public coffers with David
Mwiraria. During his time Mwiraria borrowed at a much faster pace in his 38
months at the National Treasury than his predecessor, but it was still
within sustainability thresholds. During his time as the Finance minister,
Mwiraria increased Kenya's debt by Sh112.7 billion, which is about Sh3
billion per month or Sh100 million every 24 hours.

 

By the time Mwiraria resigned in February 2006 after being linked to the
Anglo Leasing Scandal, Kenya's public debt had grown to 745 billion.

 

After Mwiraria came Amos Kimunya. The man who became famous for his phrase
"I would rather die than resign" had about two turbulent years at the
Treasury buildings where he increased Kenya's debt by about Sh117 billion.
Kimunya was borrowing about Sh4 billion every month or Sh140 million every
day. The Grand Regency hotel saga would eat him up on July 8 2008, when he
was forced to hurriedly resign from office. At that time, the public debt
was about Sh860 billion.

 

The late John Michuki would take over the Treasury docket in an acting
capacity. In this transition period of about six months, the Treasury was
borrowing about Sh18.6 billion every month or Sh621 million per day. In his
few months in office, Kenya had borrowed Sh111 billion. This saw him exit
when Kenya's debt was at Sh972 billion.

 

Uhuru's turn

 

January 2009. It was now Uhuru Kenyatta's turn at the National Treasury.
Uhuru, who would later be elected the fourth president of Kenya, increased
the pace at which the government was borrowing in his 37 months in office.
As if to point at the times to come, in his 37 months in office, before he
was hounded out by the ghosts of the International Criminal Court, Uhuru had
increased Kenya's debt by Sh529.2 billion. This works out to Sh14.3 billion
per month or Sh477 million every 24 hours.

 

His successor Robinson Njeru Githae did not slow down this momentum set by
President Kenyatta. He stepped much harder on the accelerator pedal and was
borrowing Sh764 million every day, which saw Kenya increase its debt by Sh23
billion every month.

 

'Eat rats'

 

By the end of his 16-month stint at Treasury, the man who suggested that
Kenyans could eat rats to beat cyclic starvation had increased Kenya's
public debt by another Sh 367 billion.

 

Githae would then hand over to Henry Rotich as the Jubilee administration
took charge. Rotich quickly took queue on his government's appetite for debt
to preside over Kenya's most aggressive debt accumulation. Rotich came with
Eurobonds, speeded up government-to-government debt funded projects, and
aggressively competed with private sector for domestic debt, to land Kenya
into the red zone.

 

Rotich, who is also the longest serving finance boss in Kenya in the past
two decades, borrowed a staggering Sh4.1 trillion in 74 months. This is when
all of Kenya's debt signals started blinking red. He was borrowing an
average of Sh1.8 billion every day, or Sh56 billion every month.

 

Puzzle

 

Where all this money went, which roads it built, is still a puzzle given
that the biggest infrastructure project within that period was the SGR, and
its cost was Sh327 billion. Rotich was hounded out of office due to the
Arror and Kimwarer dams scandals -- awarded to Italian firm, CMC de Ravenna.

 

Rotich left office before the Treasury could provide a list of all the
projects the Eurobond billions funded.

 

Most frightening nightmare

 

If Rotich's era was a nightmare, then Ukur Yatani's era is going to be the
most frightening nightmare of all time. In Just 15 months to November 2020,
Yatani had increased Kenya's debt by Sh1.2 trillion. This works out as Sh77
billion per month or Sh2.6 billion per day.

 

At this pace, by November 2021, Yatani would have borrowed another Sh950
billion, which will bring Kenya's debt to Sh8.2 trillion. This will leave
him with just about Sh800 billion to breach the Sh9 trillion debt ceiling.

 

This means that the first order of business for the next president will be
to increase the debt ceiling in 2022 or his or her government will go burst.

 

In the latest Budget Policy Statement (BPS) for the 2021/22 financial year,
Yatani lists debt sustainability as one of the four major risks facing the
country's economy.

 

The other risks are defaults by parastatals on debts guaranteed by the
government as well as fiscal risks related to devolution.

 

"Under performance of the economy worsens the debt indicators, thus
unsustainability. However, with fiscal consolidation, the government aims to
contain the pace of borrowing and hence reduce the debt ratios," Yatani says
in the BPS document.

 

The BPS is a government policy document that sets out the broad strategic
priorities and policy goals to guide the national government and the county
governments in preparing their budgets for the subsequent financial year and
over the medium term.

 

Restructure maturing loans

 

The document adds that contracting of new debt on short term maturities
increases the refinancing risk but the government strategy is to restructure
the maturing loans for external and domestic with loans of longer-term
maturities.

 

"The government will continue with active liability management operations in
the domestic debt primary market by switching short term domestic debt to
longer term domestic debt, with the aim of lengthening the maturity
structure," the document says.

 

"To cushion the country against the downsides of the risks emanating from
the global sphere, the government is deepening reforms in the domestic debt
market to ensure a stable and strong financial system in Kenya capable of
funding increasing share of the fiscal deficits."

 

The document adds that Kenya faces a fiscal risk as the Kenya shilling
continues to depreciate due to the fact that 51 per cent of the debt is held
in external currencies.

 

"This has led to increase in debt service budget in local currency and also
increase on the stock of debt without inflows. The ongoing global Covid-19
shock has worsened the debt indicators. However, this is expected to be
temporary as global economy recovers from the crisis."

 

Treasury notes that prudent macroeconomic management (including monetary
policy and fiscal consolidation) will help keep the exchange rate
stable.-Nation.

 

 

 

Nigeria: Naira Gains As External Reserves Rise U.S.$1.11 Billion in January

The Naira appreciated in the Investors and Exporters (I&E) window by 3.9
percent in January as the nation's external reserves recorded the first
monthly increase of $1.11 billion during the month, courtesy of the steady
upward trend in crude oil price since December.

 

Data from the CBN showed that the external reserves rose to $36.395 billion
Wednesday January 27th from $35.373 on December 31st last year. This
translates to 3.1 or $1.11 billion monthly increase.

 

The monthly increase, the first since May last year, follows an upward trend
in the reserves since December 18th, when it recorded the first daily gain
to $34.841 billion, after a nine week decline which commenced from $35.672
billion in October.

 

The steady increase in reserves since December 18th is driven by the rally
in the price of crude oil, which accounts for 90 percent of the nation's
dollar earnings.

 

After falling below $25 per barrel in April, due to the severe impact of the
COVID-19 pandemic, crude oil prices went through a bumpy recovery which
accelerated in December.

For example, the price of Nigeria's Bonny Light crude oil rose steadily to
$55.75 per barrel on Wednesday January 27th from $46.67 per barrel on
November 30th, indicating a 19.4 percent increase during the eight weeks
period.

 

Reflecting the increased dollar earnings, the naira appreciated in the
Investors and Exporters (I&E) window by 3.9 percent or N15.87 to N394.13 per
dollar in January from N410 per dollar at the end of December.

 

Turnover in I&E falls 84%

 

However, the volume of dollars traded (turnover) in the window of the
foreign exchange market fell by 84 per cent, year on year (YoY) to $906.45
million in January 2021 from $5.6 billion in January in 2020.

 

Financial Vanguard analysis also showed that turnover in the window fell by
67 percent, month-on-month (m/m) from $2.78 billion in December 2020.

 

Vanguard analysis of weekly turnover in the window showed that $206.8
million was traded in the first week of January 2021. Turnover fell by 25
percent to $155.34 million in the second week and up by 98 percent to
$306.88 million in the third week.

 

Turnover however fell by 29 percent to $237.42 million in the fourth
week.-Vanguard.

 

 

 

Namibia: Fuel Prices to Increase On Wednesday

Unfavourable international exchange rates coupled with volatile global oil
prices will see Namibians paying 50 cents a litre more for both petrol and
diesel as of Wednesday, 3 February. This means the new fuel prices at Walvis
Bay will become N$11.85 per litre for petrol and N$11.88 per litre for
diesel while prices across the rest of the country will be adjusted
accordingly.

 

The Ministry of Mines and Energy confirmed the prices increase late last
week, stating that Namibia is finding herself in a very volatile
international oil market at present and that the exchange rate has not been
favourable during the course of January 2021. The Namibia Dollar traded at
about N$15.09 per US Dollar compared to about N$14.85 throughout December
2020.

Meanwhile, the prices of petrol and diesel across the international product
market have also gone up significantly, owing mainly to supply cuts by
OPEC's biggest producer. From last month, the barrel price of petrol
increased from roughly US$52.74 to about US$59.18 while that of diesel
increased from about US$54.47 to about US$58.85.

 

"Specifically, the current review has an under-recovery of about 102 cents
on petrol and about 105 cents on diesel. In addition to these
under-recoveries, the ministry resolved to adjust the dealer margin on all
products for the service station operators by 3 cents per litre from 110
cents per litre to 113 cents per litre," read a mines ministry statement.

 

"This adjustment is in line with the general inflation rate for 2020 of
about 2.2% in accordance with data sourced from the Bank of Namibia. Due to
these under-recoveries and the need for an adjustment of the dealer margin,
the ministry has, thus, resolved to increase the price of petrol by 50 cents
per litre and that of diesel by 50 cents per litre for the month of February
2021," the statement added.

Mines ministry spokesperson, Andreas Simon, in the statement further noted
that the last review also had under-recoveries and although those were
moderate in comparison to the current figures, the ministry resolved at that
time not to increase fuel prices considering that seasonal farming
activities in most of the country were just kicking-off and a lot of
traveling from various holiday destinations was taking place.

 

"The ministry can, however, not afford to continue running under-recoveries
indefinitely. Thus, a partial upwards adjustment in fuel pump prices is
warranted to avoid passing on the full burden to consumers at the pumps.
Moving forward, the ministry will closely monitor market developments in
efforts to devise the best possible fuel pricing interventions," Simon
concluded.-New Era.

 

 

 

Namibia: Momentum Acquires Alexander Forbes

Momentum Metropolitan Namibia, through their subsidiary Momentum Short Term
Insurance Namibia (MSTIN), and Alexander Forbes Namibia Holdings have
entered a binding agreement, where MSTIN has acquired all the issued shares
of Alexander Forbes Insurance Namibia.

 

Alexander Forbes (AF) Insurance Namibia is a personal, commercial and
Alternative Risk insurance provider focussing on a personalised approach to
sales and service with niche offerings. AF is a leading insurance provider
in the country and is ranked fourth largest by market share in gross written
premium and the largest in ART structured insurance like cell captives and
self-insurance solutions.

MSTIN's focus was predominately on commercial insurance and selective
personal lines; however, the acquisition will now enable an extensive
product range due to a very strong presence in personal lines, ART and other
niche insurance solutions.

 

Johan Barnard, CEO of Momentum Short Term Insurance assured clients that,
whilst there will be a future name change, all clients will still have
access to the same products and services, be serviced by the same people and
retain their same premium as before. "Client centricity is of the utmost
importance", Barnard emphasised.

 

"Nothing will really change, it's business as usual," said Johan Verwey, MD
of Alexander Forbes Insurance Namibia.

 

Momentum Clients will soon reap the benefits of having access to Alexander
Forbes range of personal lines products, whilst Alexander Forbes Clients
will benefit from the commercial products of MSTIN, as well as a wide range
of Momentum products.

 

 

"With this transaction, Momentum can now claim to have the best products and
solutions in the short-term and life insurance industry, as well as
investments and structured insurance like cell captives and self-insurance
solutions," Barnard concluded.

 

Momentum Short Term Insurance Namibia will now provide a comprehensive,
differentiated and diversified product and service offering, as well as
group support to help clients achieve their financial goals on their journey
to success.

 

All clients of Alexander Forbes Insurance will continue to be assisted at
the premises of Alexander Forbes Insurance on the 2nd Floor, The Steps @ 1,
on the corner of Frankie Fredericks and Chasie Street, Kleine Kuppe,
Windhoek.

 

All coastal clients of Alexander Forbes Insurance and Momentum Short-Term
Insurance will continue to be assisted at the premises of Alexander Forbes
Insurance on the Ground Floor, Swakop Plaza, in Libertina Amadhila Street,
Swakopmund.

 

Alexander Forbes Insurance and Momentum Short Term Insurance clients will
still have access to the same personalized service as before, where they
will be assisted by the same trusted employees.-New Era.

 

 

 

Namibia: Air Namibia's Flawed Business Model Results in Significant
Unsustainable Debts - Official

The national airline, Air Namibia has been operating with a flawed business
model where out of the 19 routes the airline was operating in 2019, 15 were
loss-making due to high structural and operating costs, an official said
last week.

 

The Finance Minister and Chair of the Cabinet Committee on Treasury, Iipumbu
Shiimi said this follows an analysis over the past months done by the
government to understand the core reasons for the commercial failures.

 

"The highest loss-making route was the Frankfurt route where major losses
were incurred due to high fixed costs and under-utilization. It also became
clear that the combination of the types of aircraft, routes, high employee
numbers, and other structural inefficiencies contributed to the financial
distress of the company," he said.

 

 

According to Shiimi, the new business plan was then costed and compared to
the cost of liquidation.

 

"The cost of implementing the new business plan would amount to more than
N$7 billion. If we factor in the negative effects of COVID 19, the amount is
expected to be significantly higher," he added.

 

Meanwhile, Shiimi said in 2019, the government approached all airlines
currently operating in Namibia as well as those that intend to operate in
Namibia to assess if there would be any appetite to attract a strategic
partner or investment for Air Namibia.

 

"Regrettably, all of the airlines that were approached declined," he added.

 

Meanwhile, a Namibian High Court case in which Air Namibia faced possible
liquidation was settled out of court on Friday, 29 January, with the airline
promising to pay the Belgian company Challenge Air millions it owes.

 

For the past 10 years, about N$8.4 billion dollars was spent to bail out the
local airline, Shiimi concluded.-Namibia Economist.

 

 

 

Namibia: Agra Launches Online Agricultural Academy

Agra, through Agra ProVision launched an online, brand-new technology-driven
local agricultural academy, which works closely with both industry partners
and suppliers to develop specific training for the country's agricultural
sector.

 

The academy offers a special, e-learning platform, which provides students
the opportunity to study at their own pace, from the comfort of their home
environment.

 

It is an ideal platform for senior secondary scholars, school leavers,
farmers and employed individuals.

 

"The Agra Agricultural Academy offers a unique opportunity for anyone
looking to earn qualifications, skills and practical knowledge in the field
of agriculture, with a wide range of certificate programmes and diplomas,"
the company said in a statement.

 

 

All agricultural qualifications are developed by the International
Agricultural Academy for Africa with input from Agra ProVision. The
qualifications are then offered online via the internet through e-learning
programs.

 

The company's aim is to address the many challenges that Namibians face when
trying to access high quality agricultural training courses.

 

The online programs are also supported through practical training from
industry leaders. "Agri-pedia is an Internet Technology computer platform
that presents all information in text, video, animation and graphic format
and makes the transfer of information refreshing and visually
understandable. All content is adjusted where needed to ensure that it is
relevant to Namibian conditions," they added.

 

The academy was created by the professional consultancy business division of
Agra, Agra Provision which is committed to fulfilling its mandate of
"creating a smart Namibia."

 

Agra ProVision hopes to improve the technical skills and practical abilities
of Agra's core client-base, as a means to improve the productivity and the
overall business success of its clientele.

 

"The first Namibian candidates will graduate from the inaugural 2020 i3A
intake in January 2021. The next intake for student programmes in 2021 is
currently open. Contact [email protected] or phone +264 61 290 9208 for more
information," they concluded.-Namibia Economist.

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2021

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

PPC

Dairibord

 


Starafrica

Fidelity

Turnall

 


Medtech

Zimre

Nampak Zimbabwe

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
Faith Capital (Pvt) Ltd for general information purposes only and does not
constitute an offer to sell or the solicitation of an offer to buy or
subscribe for any securities. The information contained in this report has
been compiled from sources believed to be reliable, but no representation or
warranty is made or guarantee given as to its accuracy or completeness. All
opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
suitable for all investors. Securities of emerging and mid-size growth
companies typically involve a higher degree of risk and more volatility than
the securities of more established companies. Neither Faith Capital nor any
other member of Bulls ‘n Bears nor any other person, accepts any liability
whatsoever for any loss howsoever arising from any use of this report or its
contents or otherwise arising in connection therewith. Recipients of this
report shall be solely responsible for making their own independent
investigation into the business, financial condition and future prospects of
any companies referred to in this report. Other  Indices quoted herein are
for guideline purposes only and sourced from third parties.

 


 

 


(c) 2021 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:
<mailto:info at bulls.co.zw> info at bulls.co.zw Tel: +263 4 2927658 Cell: +263 77
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